Greg, I know it can't feel great when the Republican Speaker of the House chews you out for saying that outsourcing of U.S. service jobs overseas is "just a new way to do international trade." You were only saying what every economist believes -- that if something can be produced more cheaply abroad, it makes more sense to import it than produce it here. And in theory you're absolutely right.
But, Greg, listen to me: The tidal wave of outsourcing that's now hittingAmerica is very different from international trade. It's flowing throughfiber-optic cables and satellites - as quickly and easily as dialing an 800number. It's like having an Indian software engineer suddenly appear in thenext cubicle, or a Philippine radiologist in the next lab.
Sure, if they can do it cheaper we all benefit. But, Greg, you've also gotto consider the huge costs of retraining our radiologists and back-officeworkers and software engineers and everyone else whose jobs may be on theline now. And think about the difficulty of finding them new jobs that can'tbe replaced in two seconds by someone else at the end of another fiber-opticcable in India or China or the Philippines.
At the very least, Greg, you've got to admit that the incredible ease ofoutsourcing is allowing businesses all over America to hedge their bets andput off permanent hires until much later in the business cycle than everbefore. It's a big reason why this jobs recovery is so anemic. Andoutsourcing is also undermining the bargaining power of millions ofemployees who now know they can be replaced instantly if they so much aseven think about a raise.
Okay, in the long run we all may be better off, but as John Maynard Keynesonce said, 'in the long run, we're all dead.'
I'm not arguing we should ban it. The benefits of outsourcing are real.Besides, we couldn't ban it even if we wanted to. What are we gonna do,destroy all the telephone lines? No, but at least acknowledge all the socialcosts. And given these social costs, let's not subsidize outsourcing throughtax deductions. If companies want to outsource, fine. But they shouldn't beable to deduct the full costs of doing it from their corporate incomes, asthey can their American payrolls.
Greg, I know what you're going through. It's not fun to take a lot ofpolitical heat. I feel your pain. But sometimes political heat is a signthat the public is heated up. And when the public gets heated up, they wantpractical solutions, not economic theory.
